Are over-the-counter items sold at an optometry office — like nonprescription sunshades, contact solution, and eyeglass repair parts — exempt from Texas sales tax as drugs or medicines?

Plain-English summary

An optometry office asked whether various over-the-counter items it sold under an optometrist's direct supervision were exempt from Texas sales tax. Effective April 1, 2000, Texas exempted over-the-counter drugs and medicines generally — defined as an article or substance intended for use in diagnosing, curing, mitigating, treating, or preventing disease or suffering — and the Comptroller noted a product does not need an NDC (National Drug Code) number to qualify.

The Comptroller confirmed the following items were exempt when dispensed or prescribed by an ophthalmologist or optometrist: eyeglasses, nose pads used to repair eyeglasses, nonprescription sunshades, clip-on nonprescription sunshades, cords to hold glasses around the neck, over-the-counter eye medications like artificial tears, contact solutions, magnifiers, and eye patches. The Comptroller asked for more information (including whether it's used by the optometrist or sold to the patient) before ruling on one additional item, an automatic contact lens cleaning machine.

Separately, Tax Code § 151.313(6) already provided (even before the April 2000 general OTC exemption) an exemption for items sold or dispensed by optometrists and ophthalmologists, so long as the doctor issues an exemption certificate at the time of purchase — after which the item can be resold to the consumer tax-free.

This is a 2000 letter, and the copy posted on STAR carries its own alert: effective September 1, 2007 (HB 3319), an over-the-counter item must have a Drug Facts panel to qualify for this exemption — a condition this letter's 2000 analysis does not address at all, since it predates that law by seven years.

What this means for you

Optometrists and ophthalmologists selling OTC eye-care products

The core list of exempt items here (nonprescription sunshades, contact solution, artificial tears, eye patches, magnifiers, eyeglass repair parts) is a useful historical guide to what the Comptroller considered exempt "drugs and medicines" for eye care — but confirm any product you currently sell carries a Drug Facts panel, since that became a hard requirement in 2007 and this letter's analysis doesn't test for it.

Accountants and tax professionals

Treat this letter as informative on the category of exempt eye-care items but not as current authority on eligibility mechanics — the 2007 Drug Facts panel requirement is a real, later statutory change (HB 3319) layered on top of the exemption this letter describes.

Common questions

Q: Do OTC items need an NDC number to be exempt?
A: No, per this letter — a product does not require an NDC number to qualify for the OTC drug/medicine exemption.

Q: Are all items sold at an optometry office automatically exempt?
A: No. Only items that qualify as a "drug or medicine" (used to diagnose, cure, mitigate, treat, or prevent disease or suffering) and are dispensed or prescribed by the optometrist/ophthalmologist — plain eyewear accessories not tied to eye treatment may not qualify.

Q: Does the 2007 Drug Facts panel requirement change the outcome for the items listed in this letter?
A: This 2000 letter doesn't analyze that requirement at all since it didn't exist yet. Confirm current packaging/labeling requirements with a tax professional before relying on this 2000 list for present-day sales.

Q: Can I rely on this exact list of exempt items for my own optometry practice today?
A: Not directly, both because it's a STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10), and because the 2007 Drug Facts panel requirement postdates and modifies the exemption analysis here.

Citations and references

Statutes:

• Tex. Tax Code § 151.313(6) (exemption for items dispensed by optometrists/ophthalmologists)
• Note (per STAR alert on this letter): HB 3319, effective September 1, 2007, added a Drug Facts panel requirement to the general OTC drug/medicine exemption

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200012961L

Original ruling text

ALERT: Over the Counter (OTC) sales are now required to have a drug fact panel to qualify for exemption effective 09/01/2007-HB 3319.

December 6, 2000

Dear **:

This is in response to your recent letter concerning the taxability of certain
items sold from an optometry office under direct supervision of an Optometrist.

Effective April 1, 2000, sales of over-the-counter drugs and medicines are
exempt. To qualify for this exemption, a product must be a drug or medicine,
which is an article or substance intended for use in the diagnosis, cure,
mitigation, treatment, or prevention of disease or suffering.

A product does not require an NDC number to qualify for exemption.

The products below that were listed in your letter are exempt if dispensed or
prescribed by an ophthalmologist or optometrist.

Eyeglasses
Nose pads used to repair eyeglasses
Nonprescription sunshades
Clip-on sunshades nonprescription
Cords to hold glasses around neck
Over-the-counter medications, i.e., artificial tears
Contact solutions
Magnifiers
Eye patches.

Automatic contact lens cleaner (this is a machine) - Response: Please provide
more information concerning this item. Also, is it used by the optometrist or
sold to the patient? A marketing brochure would be helpful.

I have enclosed Publication 94-155 "Sales Tax Exemption for Over-the-Counter
Drugs and Medicine". The publication was revised in April to clarify the
exemption. Eye care and contact lens products applied to the eye are exempt
effective April 1, 2000.

Keep in mind, Subsection 151.313(6) provides an exemption from sales tax on the
items when sold or dispensed by optometrists and ophthalmologists. An
exemption certificate must be issued at the doctor's time of purchase. After
that, the item can be sold tax free to the consumer. This exemption was
available prior to April 1, 2000.

The State Tax Automated Research (STAR) system, which provides viewing and
downloading of our rules, the Tax code, edited letter rulings, hearings,
Attorney General Opinions, etc., may be accessed on the Internet at
http://www.window.state.tx.us/.

This opinion is based on the facts presented. Other facts, though similar, may
provide a different result.

If you have any questions or need more information, I'll be glad to help you.
You may call me toll-free at 1-800-531-5441, extension 5-0330. The direct line
is 512/475-0330. You may also write to Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division